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Sunday, January 30, 2005

OPEC Sees No Harm in $50 Oil, Holds Output

VIENNA (Reuters) - OPEC producers agreed Sunday to keep output limits on hold, convinced that oil prices near $50 a barrel are not stifling world growth.
The Organization of the Petroleum Exporting Countries wasted little time in deciding on no change to supply quotas, despite worries among consumer nations about inflated fuel costs.
Gone are the concerns that dominated in OPEC last year about the impact of rising crude prices on the economic growth that drives demand for its oil.
With inflation in the world's big economic powers in check and low interest rates still generating above trend growth, cartel ministers see no reason for cheaper oil.
"$50 oil will not play a big role in slowing up growth of the economy. Some analysts say even $60 oil will play a small role in affecting growth," said OPEC President Sheikh Ahmad al-Fahd al-Sabah of Kuwait.
"I am comfortable with the market between $45 and $55," said Edmund Daukoru, Nigeria's Presidential Adviser on energy.
OPEC now appears ready to defend oil prices at a floor of about $40 a barrel for U.S. crude, or $35 for a reference basket of cartel crudes.
Ministers agreed to officially set aside their old $22-$28 range for the basket, set in March 2000, but are in no hurry to set a new target, saying prices are too volatile.